(Corrects record date in paragraph 5 to March 14 from May 13)
* Offered to let Casablanca appoint 2 independent directors
* One director was to have been appointed by mutual
* Postponing record date for annual shareholder meeting
* Casablanca denies making a postponement request
March 7 The war of words between Cliffs Natural
Resources Inc and Casablanca Capital escalated on
Friday, after the activist investor rejected an offer to end a
proxy battle to win control of the iron ore miner's board.
Casablanca, Cliffs' fifth-largest shareholder with a 5.2
percent stake, wants Chief Executive Gary Halverson gone, and
the company to spin off its "riskier" international operations
from cash-generating U.S. assets.
The hedge fund, which started its campaign in January,
nominated six directors for election to Cliffs' 11-member board
Cliffs had offered to let Casablanca appoint two independent
directors and a third director was to have been appointed on
mutual agreement, the company said in a statement issued early
Cliffs also said it acceded to Casablanca's request to
postpone the March 14 record date - the date on which an
investor must own shares to be entitled to vote - for its annual
Casablanca, however, issued a statement later in the day
denying making such a request.
"The board that owns virtually no shares and has presided
over an 80 percent value destruction is in our view showing its
true colors by indefinitely postponing a shareholder vote and
falsely suggesting that the delay was advocated by Casablanca,"
the fund said.
Cliffs returned with a statement late on Friday saying the
suggestion to postpone the record date was made by Casablanca
Chairman Donald Drapkin in a telephonic conversation with
Cliffs' Chairman, James Kirsch.
Cliffs, which is yet to set a new date for the meeting, said
it was ready to engage with Casablanca.
Cliffs shares have fallen 81 percent in a little more than
two-and-half years. They closed down 2.3 percent lower at $18.65
on Friday on the New York Stock Exchange.
The company has been hit by weak iron ore prices and
higher-than-expected costs at its Bloom Lake mine in Quebec,
Canada - once seen by analysts as a key growth prospect.
Cliffs appointed Gary Halverson chief executive last month
and said it would indefinitely suspend a planned expansion at
Bloom Lake and shut another mine in Canada, cutting about 500
Casablanca has said it wants former Metals USA CEO Lourenco
Goncalves to head Cliffs. Goncalves is part of Casablanca's
slate of nominees to Cliff's board, along with the fund's CEO
Casablanca's attempt to seek majority of seats on Cliffs'
board is likely to meet with a greater degree of scrutiny from
proxy advisory firms such as Institutional Shareholder Services
(ISS) and Glass Lewis, who typically apply stricter tests when
assessing majority slates put forward by activist investors.
Proxy advisory firms advise large institutional investors
ahead of shareholder votes and their reports very often sway
votes for or against management in proxy battles.
(Reporting by Swetha Gopinath and Mridhula Raghavan in
Bangalore, Euan Rocha in Toronto; Editing by Joyjeet Das and